Document Sample
Management Report – 1 Half 2011

Dear Shareholders,
We present the Management Report of Banco do Brasil (BB) for the 1st
half of 2011 (1H11), in accordance with the requirements of the
Brazilian Corporate Law, the National Monetary Council (CMN), the
Central Bank of Brazil – BCB, the Brazilian Securities and Exchange
Commission – CVM and Banco do Brasil's Bylaws.

In the international environment, the first half of 2011 was marked by
continuity of doubts concerning the pace of growth of developed
economies, the severe effects of the earthquake in Japan and
increasing inflation on a global scale.
In general, the international outlook remained characterized by a
mismatch between the pace of growth of economic activity in developed
and emerging countries. In the first group, the imbalance of public
accounts and the still unstable trajectory of recovery justified the
maintenance of expansionary fiscal and monetary policies in the United
States, which are reinforced in Japan, given the recession recorded in
that economy early this year. However, in Europe, despite the
difficulties in financing the debts of some countries, the European
Central Bank took the first step towards the beginning of a cycle of
rising interest rates.
The increase of interest rates in the Euro area and in several other
countries was a response to the inflationary impacts arising from
increased domestic demand, mainly due to the rise in commodity prices
in the international market, especially of food.
The supply shock from food products was precisely one of the main
factors that reflected negatively on the level of domestic prices, leading
to inflation measured by the IPCA for values accumulated in twelve
months close to the upper limit of the inflation target (6.5%).
There is also the good performance of the job market, with
unemployment rates at minimum levels, high net generation of formal
jobs and real income gains. These fundamentals, together with the
credit market, continued to be the main domestic demand leverage
In response, the Central Bank of Brazil commenced a cycle of
adjustment of the basic interest rate, raising it by 150 basis points over
the half, with the rate reaching a level of 12.25% per annum. At the
same time, the government implemented a series of macroprudential

Management Report – 1 Half 2011

measures considered complementary to the interest rate adjustment,
the most traditional monetary policy instrument.
The main mechanism for transmission of these measures to the
economy is via the credit channel. Indeed, the preliminary data from the
first half of 2011 confirms the slowdown in the pace of growth of
concessions of loans, especially those targeting individuals.

With a net income of R$ 6.3 billion and total assets of 904.1 billion, BB
ended the first half as the leader in the Banking Industry, with an
emphasis on its loan operations, with a market share of 19.6%.
In April, Banco do Brasil concluded the agreement for acquisition of
Banco Patagonia’s (from Argentina) shareholding control, with the
payment to the sellers and transfer to BB of 366,825,016 common
shares, corresponding to 51% of the capital stock and voting capital of
that bank. The next step refers to the performance of a Public Offering
of Compulsory Acquisition (OPA), the request for which was filed with
the Comisión Nacional de Valores da Argentina (CNV) on 4.7.2011.
The "BB 2.0 Retail Transformation Program" continues to gather the
main strategic actions designed to consolidate and expand BB’s
leadership in the Brazilian retail banking sector. Throughout the half,
new actions implemented under the program remained focused on the
profitability of the client base, through excellent service, knowledge of
clients (CRM), expansion of relationship and business, efficiency in
processes and increase in the supply of convenience through adequacy
of the customer service channels.
Several actions were adopted to review the model of service delivered
to corporate clients with gross annual turnover above R$ 25 million, in
order to improve the quality of service delivered, allowing advances in
efficiency indicators and reinforcing BB’s competitive positioning in this
market. During the half, BB implemented the review of the clients’
segmentation model from the wholesale market superintendencies and
branches, besides areas dedicated to the structuring of loans for large
We present below a chronological list of some events relating to BB that
were highlights in the half:
    acquisition, on 1/24/2011, of all the shareholding control (16.67%
     ON) held by Sul América Capitalização S.A. in Brasilcap, for the
     price of R$ 137 million;

Management Report – 1 Half 2011

    signing of a Share’s Sales and Purchase Agreement with Visa
     International Service Association for the purchase of part of the
     shares held by that firm in Companhia Brasileira de Soluções e
     Serviços - CBSS, corresponding to 4.99% of the capital stock of
     CBSS, valued at R$ 85.5 million on 1/24/2011;
    launch of Elo Flagship and start of trading of Ourocard Elo on
     04/04/2011, which is managed by the company Elo Serviços, and
     conclusion of the partnership of Banco do Brasil with Elo
     Participações - responsible for the consolidation of business
     related to electronic payment methods (credit cards, debit,
     prepaid, cobranded) – with the signing of the corporate
     documents on 4/29/2011;
    beginning of the structuring of the company Alpha Serviços de
     Rede de Autoatendimento S.A, a subsidiary of Elo Participações,
     which will handle the sharing of ATM networks of the partner
    upgrading, in April/2011, of BB’s ratings by the Fitch Ratings
     agency, as described below:
           Long-term Foreign Currency: BBB, with stable outlook
            (previous 'BBB-');
           Short-term Foreign Currency: F2 (previous 'F3');
           Long-term Domestic Currency: BBB, with stable outlook
            (previous 'BBB-');
           Short-term Domestic Currency: F2 (previous 'F3');
           Support Rating Floor: BBB (previous “BBB -“)
           Long-term National Rating: AAA (bra) (previous AA+(bra);
    Conclusion of the acquisition process of Banco Patagonia S.A., in
    signing, on 4/25/2011, of a Share’s Sales and Purchase
     Agreement aiming at the acquisition of 100% of EuroBank’s
     owner’s capital, by the amount of US$ 6 million;
    acquisition, by the amount of R$ 2.8 billion, of the Banco Postal
     network (an operation of the Brazilian Postal and Telegraph
     Company – Correios), allowing BB to use its network to offer
     banking products and services, by 01/02/2012.
    opening of the Loja Conceito in Brasilia, on 5/17/2011, becoming
     an unprecedented initiative in retail banking market, with a space

Management Report – 1 Half 2011

       where clients can experience the key attributes that make up the
       BB’s brand positioning;
    upgrading, in June/2011, of BB's ratings by the Moody's agency,
     as described below:
           Long-Term Deposit in Foreign Currency: Baa2, with positive
            outlook (previous “Baa3”);
           Short-Term Deposit in Foreign Currency: Prime-2 (previous
           Long-Term Foreign Currency Senior Debt: (P)Baa1, with
            positive outlook (previous '(P)Baa2').

Aiming to maintain its leadership in the Brazilian banking industry and to
reinforce its role of essential partner for the development of Brazil,
Banco do Brasil prioritized the streamlining of returns, efficiency,
customer care improvement and the expansion of activity in the foreign
market as major strategic topics for 2011-2015 period.
The streamlining of returns will be achieved through the increase of
profitable business, observing an adequate risk/return ratio. Banco do
Brasil will pursue operational and business efficiency through the
upgrading of business processes and models, besides the improvement
of customer service that will occur through the upgrading of clients
International performance will be based on three vectors: overseas
Brazilian communities, the transnationalization of Brazilian corporations,
and expansion of the Brazil's business relations with the world.
Banco do Brasil’s performance as a partner in the sustainable
development of the country will take place with an emphasis on
activities that generate employment and income, especially: Minha
Casa Minha Vida Program, Programa Nacional do Microcrédito
Produtivo Orientado, support to small and micro entreprises, Programa
Nacional da Agricultura Familiar – Pronaf (family farming), Fundo de
Financiamento ao Estudante do Ensino Superior – FIES and
encouragement to associative practices.
The mission was adjusted to align the BB’s businesses to the
sustainability and the development of the country, and now reads as
follows: "to be a competitive and profitable bank, to promote the
sustainable development of Brazil and to perform its public role

Management Report – 1 Half 2011

BB's future vision, updated for the 2011-2015 period, maintains the
commitment to performance, to employees, and to socio-environmental
responsibility, emphasizing the desire to be closer to the client and to
be a reference abroad. Therefore, BB's new future vision is: "to be the
first bank of Brazilians, of companies and of the public sector, a
reference abroad, the best bank to work for, recognized for its
performance, long lasting relationships and socioenvironmental
To achieve the strategic planning objectives, Banco do Brasil operates
in several fronts of corporate management. Good practices of corporate
governance, relationship with the market, internal processes, external
ombudsman service, governance of technology and information,
people, logistics and eco-efficiency are essential for the success of the


Socio-environmental responsibility is part of the Company's bicentennial
tradition and is expressed in its corporate policies and strategies.
Credit, granted in a responsible manner to a wide variety of productive
sectors of the economy - family agriculture, other rural producers,
foreign trade, micro and small enterprises - leverages the progress of
the Brazilian municipalities where BB operates.
Concerned about responsible credit, Banco do Brasil does not provide
credit to clients included in the list of employers that submit their
workers to degrading forms of labor or keep them in conditions
analogous to slave labor. This decision also applies to anyone involved
in child labor and the sexual exploitation of minors.
It is a continuous challenge of Banco do Brasil to get socio-
environmental responsibility to be present in all of the company's
In adopting the referential of sustainability as a strategic guideline, BB
seeks to assess its organizational performance not only on a basis of
economic indicators, but also of indicators of a social and environmental
nature, such as the defense and promotion of human rights, generation
of jobs and income, and environmental conservation.
In the segment of Private clients, seeking the balance between risk and
return, BB developed a stock portfolio composed of shares from
companies committed to the sustainability cause. The portfolio is
situated between the defensive and moderate profiles. To select the

Management Report – 1 Half 2011

shares that will compose the portfolio, BB choose the most well ranked
in the Sustentabilidade Empresarial – ISE, Governança Corporativa –
IGC and Tag Along – ITAG indexes of BM&FBovespa.

The Sustainability Plan - BB's Agenda 21, is a pioneer initiative in
business circles, involving the entire organization in initiatives in favor of
sustainable development. It consists of BB's contribution to the efforts
established in the Global Agenda 21, conceived during the United
Nations Conference on Environment and Development – Rio-92, and
that aimed to direct a new standard of development for the 21th century,
the foundation of which is the synergy of environmental, social and
economic sustainability.
Agenda 21 BB, established since 2005, is periodically reviewed by the
Board of Officers, considering stakeholders, public agreements signed,
scenarios, national and international socio-environmental references. In
2010, the review featured the participation of executives from across
the company, as well as from Fundação Banco do Brasil, Cassi, Previ,
BB-DTVM and Fenabb, resulting in 77 actions for the period of 2011-
2013, distributed in the Processes and Management, Businesses
Focused on Sustainable Development and Private Social Investment
The results of the Sustainability Plan are monitored by the Board of
Officers and published in the Annual Report, using the highest standard
of the Global Reporting Initiative - GRI. In 2010, the review featured the
participation of executives from across the company, as well as from
Fundação Banco do Brasil, Cassi, Previ, BB-DTVM and Fenabb,
resulting in 77 actions for the period of 2011-2013, distributed in the
Processes and Management, Businesses Focused on Sustainable
Development and Private Social Investment Spheres.
In the "Businesses Focused on Sustainable Development" sphere,
special emphasis is placed on the Sustainable Regional Development
Strategy - DRS, which is aimed at boosting the development of the
regions where BB is present, supporting activities that promote social
inclusion and the generation of jobs and income in a sustainable,
inclusive and participatory manner. With this strategy, BB materializes
its considerable differential, becoming an organization that seeks to
catalyze various economic, social and political agents in the adoption of
economically viable, environmentally correct and socially fair practices,
contributing to invigorate local economies, with respect for cultural

Management Report – 1 Half 2011

Its performance is based on the value chain view to refine the entire
productive process, from input supply, through production, processing
and storage, until the product reaches the final consumer. Actions
include capacity building of beneficiaries, encouragement of
associativism and cooperativism, introduction of new technologies,
dissemination of the entrepreneurial culture and promotion of access to
In order to further strengthen its commitment to the environment and to
society in favor of sustainable development, in 2011 Banco do Brasil
launched four fascicles on performance in the chain of recycling and
solid waste, focusing on the 4,976 municipalities with up to 50 thousand
inhabitants. With this action, BB aims to provide guidance to local
governments and contribute to the preparation of the Municipal or Inter-
municipal plans for Integrated Management of Solid Waste, in
compliance with Law 12305/10, which established the National Policy
on Solid Waste, of shared responsibility among governments,
entrepreneurs and citizens.
At the end of the half, the DRS Strategy recorded 4.0 thousand
business plans under implementation, involving 1.4 million beneficiaries
in 4.0 thousand Brazilian municipalities, with a loan portfolio balance of
R$ 10.4 billion, of which about R$ 5.8 were invested through the
National Program for Strengthening of Family Farming (Pronaf).
For        further      information,        see        the         website


Banco do Brasil recorded a net income of R$ 6.3 billion in the half,
23.4% higher than the one recorded in the same period of last year,
with an annualized return on equity of 25.4%. Net income per share
was R$ 2.19 for the period.
Total assets surpassed R$ 904.1 billion, growth of 19.6% in 12 months,
with a return on assets of 1.5% in the 1H11. Shareholders' equity
reached R$ 54.6 billion, an increase of 38.9% in 12 months, affected by
the public offering of shares, in the 2nd half of 2010, and incorporation of

Management Report – 1 Half 2011

                                                                                                     R$ million
  Income¹                                                                1H11           1H10       ∆ 1H10 (%)
  Net income²                                                            6,262          5,076         23.4
  Income (without Etraordinary Items)                                    6,153          4,383         40.4
  Gross Financial Intermediation Income                                 15,160         11,896         27.4
  Revenue from Loans                                                    29,739         24,317         22.3
  Fee Income                                                             8,495          7,729          9.9
  Income from Insurance, Pension Plans and Saving Bonds Operations       1,180           909          29.8
  Administrative Expenses³                                              13,136         12,441          5.6
  Net Income per Share (in R$)                                           2.19           2.00           9.5
  Return on Assets                                                       1.5%           1.4%         0,1 p.p
  Return on Equity                                                      25.4%          28.7%        (3.3 p.p)
  Efficiency Ratio                                                       42.4           44.5        (2.1 p.p)

                                                                                                      R$ billion
  Equity                                                                  Jun/11        Jun/10     ∆ 1H10 (%)
  Assets                                                                   904.1         755.7        19.6
  Amplified Loan portfolio4                                                421.3         350.5        20.2
  Deposits and market funding5                                             589.0         510.6        15.4
  Assets under Management                                                  407.7         344.9        18.2
    ¹ Items based on Consolidated Statements.
    ² Parent Company Earnings
      Refers to the sum of Personnel Expenses and Other Administrative Expenses.
      Includes Private Securities and Guarantees Provided
      Time and demand deposits, Savings deposits, Interbank deposits and Money Market Borrowings

See further information about the economic-financial performance of BB
in the Management Discussion and Analysis at BB's Portal

BB ended 1H11 with a market value of R$ 80.1 billion. In the theoretical
portfolio of Ibovespa for the next four months May/11–Aug/11, BB
occupies 6th place, an all-time record at Ibovespa, with a market share
of 3.105%.
Banco do Brasil's shares (BBAS3) ended the first half at R$ 28.00, a
growth of 20.7% in 12 months, against appreciation of 2.4% of
BBAS3 was traded in all BM&FBovespa's sessions, in the daily mid
amount of R$ 154.7 million in the 1H11, as opposed to R$ 94.9 million
in the same period of previous year, and continues to be listed in the
theoretical portfolios of the major São Paulo Stock Exchange indexes:
Ibovespa, Ibrx50, IGC, ISE and Itag.
The shares of Banco do Brasil were once again listed in the ISE index
of BM&FBovespa as the result of management guided by the
entrepreneurial Agenda 21. Banco do Brasil strives to maintain the
organization's efforts with regard to good corporate governance

Management Report – 1 Half 2011

practices and sustainability, based on the balance on economic, social
and environmental dimensions.
In addition to the above mentioned indexes, BBAS3 also appeared on
the Dow Jones Amplified Sustainability Index, created by the New York
Stock Exchange and by SAM - Sustainable Asset Management, a
Swiss organization focused on sustainable investments.
In June 2011, the American Depositary Receipt – ADR Level I Program
of Banco do Brasil recorded 13.4 million ADRs in circulation.
The exercise of Series C Subscriptions Warrants, issued on
06/17/1996, was in the period of april to june of 2011. Each warrant
grants the right to subscribe 3.131799 common shares. The exercise of
warrants generated 4,687,773 shares, and after approval by the BB, will
be converted into equal number of common shares. This movement
resulted in increase in BB’s capital for R$ 44.6 million.
Banco do Brasil, aligned with its profit reinvestment and dividend
distribution policy, distributes 40% of the net income earned (payout) in
the form of dividends and interest on own capital with quarterly
periodicity. The amount of R$ 2,504.9 million was allocated to
shareholders in the semester: R$ 1,044.3 million as dividends and R$
1,460.6 million as interest on own capital. The remaining 60% of the net
income were used as legal and by-laws reserves.

                          BUSINESS PERFORMANCE

Banco do Brasil ended the 1H11 with a base of 55.2 million customers
and 35.6 million checking accounts (33.4 million individuals checking
accounts and 2.2 million business checking accounts), a growth of 1.9%
in 12 months.

BB 2.0 Retail Transformation Program
Over the half, Banco do Brasil continued with the “BB 2.0 Retail
Transformation Program”, the objective of which is attain a new level of
strategic positioning and for the sustainability of the institution's
In an unprecedented model, four meetings were scheduled with the
leaders of BB across the country to share information about the
program. About 5.5 thousand of managers from branches and

Management Report – 1 Half 2011

superintendences were to the meetings showing high level of
interaction and commitment with the program’s improvement goals.
The program establishes the implementation of a set of actions to
streamline the return on the client base, with better use of existing
business opportunities. The actions are grouped in the following blocks:
            adjustments to the client relationship          model,    for
             strengthening of contacts and business;
            customer relationship management - CRM, for identification
             and seizing of opportunities existing in the client base;
            increase in the offer of convenience and seizing of
            opportunities for contact with clients, due to the adequacy
            and integration of the customer service channels;
            review of the sales and customer service dynamics, with an
            increase in business efficiency and agility in the response to
            adjustments in the sales planning and budget process,
            aiming at better use of the opportunities of the client base.
Among the main actions carried out under the program over the course
of the half, we highlight:
           conclusion of the deployment of the new model of
            relationship with individual clients at all of BB’s branches.
           conclusion of the deployment and training of the sales force
            in the new business platform, a tool that rationalizes the
            core sales processes and builds up knowledge about
            opportunities with the client, boosting the assertiveness of
           deployment of consumption propensity models for eight
            banking products prioritized in the retail business operation.
            The new propensity models boost the assertiveness of
            direct marketing actions, including setting guidelines for the
            offer by the sales force;
           review of 15 processes with high demand for customer
            service, reducing the total time taken for the performance of
            these processes by up to 60%;
           achievement of the milestone of 152 branches configured
            with the new customer service environment. The new model
            adopted in the architecture of BB branches reinforces
            attributes of modernity and convenience for customers,
            while valuing the spaces reserved for doing business;

Management Report – 1 Half 2011

           construction of the Strategic Convenience Plan for
            2011/2015 that consolidates the proposal of investments in
            physical channels of BB for the next five years, considering
            BB’s     strategic positioning through the following
            assumptions: (i) Marketing - earning power, profitability and
            financial return; (ii) Positioning - visibility, brand value and
            presence in locations with a heavy flow of people and
            tourists; (iii) Development Inducer - social and banking
            inclusion besides citizenship, seeking to serve municipalities
            and communities with lower rates of development, but with
            medium and long-term potential;
           training and up-skilling of more than 73.6 thousand
            employees from the network of branches in business
            practices and customer service (further information on
            training can be found in the "People" section of this report);
           review of the segmentation model for companies served in
            the retail market, with expansion of billing contemplated for
            up to R$ 25 million and specialization of customer service in
            three segments: Microenterprise, Small Company and
           expansion of specialized customer service for the public
            sector market, especially in the Municipal Executive Branch,
            with the preparation of a relationship model for the larger
           adoption of a differentiated relationship model for
            agribusinessmen that are clients, with personalized service,
            supply of specific products and services and expert advice.
The search for greater client focus has also been generating
adaptations in the organizational framework. BB created the
Directorship of Individual Clients in May. This is another area that
should contribute to increment the results achieved with the retail
operation, running the institutional side of various actions originating
within the BB 2.0 program and acting strategically to ensure the client
vision in commercial and relationship actions.
With the adjustments made, BB’s corporate architecture geared toward
retail performance achieved further specialization in: customer service
and relationship with clients; sales force management; process
management; and offer of convenience and channel management.
With these and other actions, the "BB 2.0 Retail Transformation
Program" is already presenting some of its first results. There was

Management Report – 1 Half 2011

growth of R$ 510 million in the monthly profitability of individuals retail
clients in the semester. The client satisfaction index, released during
the same period, and covering 2010, presented positive inflexion of
2.5% in relation to the observed in the last years.

University Niche
University students represent a very special segment, of high value. It is
a segment with considerable relationship potential, as it is in the initial
stage of the productive cycle, demanding solutions that create support
for their personal and professional life projects. The business
partnerships formed in this stage tend to be long lasting, contributing to
the renewal of BB’s client base.
One of the main fronts of BB's relationship with university students is
the Fund for Financing Higher Education Students - FIES, which
recorded the contracting of 13,500 new operations in 1H11, totaling
around R$ 560 million in the period. FIES finances up to 100% of
graduation fees, with a payment deadline that is up to three times the
period financed and start of payment 18 months after graduation,
favoring long-term relationships.

Wholesale Clients
In the wholesale area, where BB serves clients with gross annual
turnover above R$ 25 million, the review of segmentation model was
concluded, which now features the Large Corporate, Corporate, Upper
Middle and Middle segments.
There have been changes in the organizational model of the strategic,
tactical and operational units dedicated to wholesale clients. As a result,
the headquarters of the Commercial Directorship and its divisions linked
to the structuring of operations, strategies with clients and distribution
network were transferred from Brasilia to São Paulo, where the
wholesale clients are concentrated. The superintendencies and
branches were also reviewed in order to focus by client segment.
For the second half of 2011, efforts in the wholesale area will be
concentrated on the training and management of talents, expansion of
the centralization of middle office services, besides strategies for
streamlining of returns and development of innovative products and
services. These actions will afford a significant advance in the quality of
customer service, reinforcing BB's leadership position with the largest

Management Report – 1 Half 2011

In the retail area, the delivery of service to businesses clients was
changed for companies with gross annual turnover up to R$ 25 million,
implementing a review of the segmentation model, which now features
the Microenterprise, Small Company and Company segments.
BB has also been consolidating its market share with the credit
cooperative segment, delivering solutions customized to satisfy the
needs of this market. One of the most prominent solutions is the
Compe/SPB (Brazilian System of Payment) Integration Service
whereby its banking products could be delivered to 400.4 thousand
cooperative members, associated with 337 credit cooperatives, in

Management of Customer Service and Channels
BB makes available to its customers an access for conducting business
by physical networks (branches, service centers, automated teller
machines and correspondents) and virtual networks (call center,
internet, mobile banking and Digital TV).
BB has the largest number of branches in Brazil in its physical network,
with 5,094 thousand units, besides having 12,739 correspondents,
8,492 service points and the largest collection of automated teller
machines (ATMs) in Latin America, with 43,920 of its own machines.
BB has 87.9% of branches and Bank Service Points - PAB already
adapted for physically handicapped people.
In the 1H11, BB opened 86 new branches, 6 of these dedicated
specifically to delivery services to Estilo segment (High Income). In the
period were opened 66 Electronic Service Stations as well.
Furthermore, according to the strategy of expanding its presence in
communities, in January 2011 BB opened branches in Morro do
Alemão and Cidade de Deus, in Rio de Janeiro, contributing to banking
inclusion and the sustainable development of these places.
Moreover, it is the only bank that has a network of specialized branches
for the delivery of services to the public sector, present in all the
Brazilian capitals and major towns and cities.
BB has two abroad networks: its own, formed by 47 service points in 23
countries, and a supplementary one, formed by 1,087 correspondent
banks in 137 countries. BB's abroad network supports the
internationalization process of Brazilian companies, the increase of the
flow of the international trade and support to Brazilians community.
In automated teller machines, about 33.9% of all BB banking
transactions are performed monthly. In order to provide more comfort

Management Report – 1 Half 2011

and convenience, in the 1H11, 1,522 ATMs were modernized and over
960 were installed in new points. Up to June 30, 2011 the automated
channels responded for 92.7% of all BB banking transactions.
Since the beginning of 2011, BB has centralized the tracking of the
availability of all the automated teller machines in the ATM Environment
Monitoring Centers, aiming to guarantee client satisfaction with this
At the same time, it started the imaging monitoring of ATM rooms in
large centers. In addition to cleaner rooms and available equipment, the
project targets an inviting environment that favors business
By means of its virtual network, BB provides additional channels for
access to banking services, such as the call center, the internet self-
service (both for individuals and corporations), the mobile banking and
Digital TV.
BB's internet self-service ended the 1H11 with the mark of over 800.5
million effective transactions, corresponding to 39.3% of the total of
transactions and over 11.8 million customers using that channel. The
Finance Manager, the self-service channel for business clients, reached
656.5 million operations, being used for more than 1,515 thousand
BB mobile self-service accounted for 3.3 million of transactions carried
out by over 1.3 million of customers with a mobile phone enabled to
perform banking operations. Moreover, the Central de Atendimento BB
(CABB) - a customer service center - carried out 54.6 million of
transactions by 12.6 million of customers enabled to use this channel.
The half was also marked by innovations in the customer service
provided to clients. Innovations that merit special emphasis include:
    availability of access to the Finance Manager and Public Sector
     Self-Service via iPhone and iPod Touch. The launch of the new
     functionality keeps BB in line with the precursor standards of
     technology and security, making easier the routine of
     entrepreneurs and public administrators;
    project Orla Rio - in 2010, Banco do Brasil and the company Orla
     Rio Associados signed an agreement that provides for the rental
     of 2 booths and 11 electronic service posts on the seafront from
     Copacabana to Leme, over a period of 11 years.
     In an unprecedented initiative, the institution creatively occupies
     the space, organizing shows, holding cultural workshops and
     carrying out promotional actions.

Management Report – 1 Half 2011

      The objective of this project is to reinforce the BB’s presence in
      one of Brazil's most scenic locations, which receives millions of
      tourists on an yearly basis and has been chosen to host major
      international events in the coming years, such as the World Cup
      and the Olympics;
    espaço Banco do Brasil - On May 17, BB opened the first concept
     store of the national financial sector in Shopping Iguatemi Brasilia.
     Conceived as a brand experimentation site, the store allows
     clients not only access ATMs and receive explanations about
     financial products, but can also indulge in the comfort of the
     environment, explore the modern and avant-garde design of the
     decoration, amuse themselves with games, taste a cup of
     legitimate Brazilian coffee and get to know the future trends and
     innovations of the financial market;
    continuity of the Pilot Test of Sharing of the External Networks of
     ATMs, with the participation of Banco do Brasil S.A, Banco
     Bradesco S.A and Banco Santander (Brazil) S.A, aiming to
     evaluate the appeal to the customers of institutions, as well as
     technological impacts and operational implications relating to the
     topic. By 5/31/2011 a total of 1.7 million operations (concluded
     transactions and incidents) had been performed, with 452
     thousand by BB clients (26.4%);
     formalization, to operate throughout Brazil, of the partnership
       formed between BB and the loyalty program operating company
       Dotz, offering BB's clients more alternatives and higher speed in
       the accumulation of points, besides greater mix of awards to be
Customer service through social networks, through Twitter with the
profile @maisbb, and with the Mais Banco do Brasil page on Facebook
proved to be effective and has been attracting more and more
customers. BB has responded to questions from users with the timing
that the channel requires, demonstrating its concern to satisfy the client
in all contacts. In the first six months of 2011, perfil @maisbb recorded
a growth of 46% in its number of followers, while on Facebook the
increase in the number of fans was 82%.
The partnerships formed with the correspondents during the year made
it possible to achieve an increase of 21.5% in the number of service
points in the country. These new partners were responsible for an
increase of 11.0% in the balance of reception of payroll loan proposals,
in comparison with the previous year and for 12.0% of the accounts
opened at BB.

Management Report – 1 Half 2011

Within the strategy of customer service through correspondents, the
major action of the half was the acquisition, by Banco do Brasil, of the
right to be a partner of Empresa Brasileira de Correios e Telégrafos for
the rendering of correspondent services through the Postal Bank.
The victory in the bidding process will allow BB to bring forward the
strategy of extending its service points throughout the country and of
being in 100% of Brazilian municipalities by 2015. Under the
agreement, this target will be achieved in 2012 and, therefore, the
revenues originating from this performance.
Today, BB is in 4,387 municipalities, with 53,445 service points.
Correios (Brazilian Post Office Company) has 6,195 branches with the
Postal Bank and is present in 95% of Brazilian municipalities.
The partnership with the Postal Bank provides the chance to offer other
products, such as credit cards and prepaid cards, in addition to
microcredit lines.
The commitment to consumer rights and to good customer service is
manifested by transparency and objectiveness in relations with clients.
BB informs the rates and tariffs practiced in a clear and direct manner.
The employees receive specific training to improve customer service,
such as "Brazilian Sign Language - Libras" and "Consumer Defense
As an evidence of BB’s priorization of client service, in the 1H11 were
hired more than 5,852 new employees, 5,757 of them allocated to work
directly in the frontline of our branches, with clients.

Banco do Brasil, leader in the market of deposits, recorded R$ 589.0
billion in funding in 1H11, growth of 15.4% over the same period of
previous year, which reflects the clients' confidence in BB. Time
deposits deserve special emphasis with growth of 21.5% in 12 months.
Besides time deposits, demand deposits and saving deposits BB also
exhibited growth in the last 12 months, with 9.4% and 3.6%,
In foreign funding, the highlight was BB’s Euros issue, wich attracted
EUR 750 million, one of the largest ever made by a Brazilian company.
Additionally, BB also performed a subordinated debt issue in the
amount of US$ 1.5 billion. The financial costs were competitive in both,
factors that demonstrate the market's interest in securities issued by

Management Report – 1 Half 2011

BB. At the end of 1H11, the balance of overseas funding recorded US$
31.7 billion, variation of US$ 8.1 billion or 34.3% in relation to 1H10.
Seeking to diversify its modus operandi in the market, BB offers its
clients the chance to invest in Financial Bills – LF and Agricultural
Credit Bills – LCA, the balances of which at the end of 1H11 were R$
6.8 billion and R$ 4.1 billion, respectively.

In 1H11, BB DTVM, Brazil's largest asset management, reached R$
407.7 billion in assets under management, comprising its investment
funds and managed portfolios. This volume represented an increase of
18.2% in 12 months, according to the Associação Brasileira das
Entidades dos Mercados Financeiros e de Capitais – Anbima.
Please note that these figures still do not include funds managed by
Banco Votorantim, that attained R$ 27.3 billion in June 2011. If 50.0%
of the balance managed by BV were to be consolidated, a percentage
equal to BB's interest in the latter's total equity capital, Banco do Brasil's
market share would rise to 23.1%.
Aiming to increment BB’s positioning in the view of our private clients
and to qualify our portfolio of products, we developed new funds that
include BB Estratégia 6.
In this segment, together with BB-DTVM, we launched Fundo de
Investimento Multimercado Global Acqua, a global multi-market
investment fund that plans to invest part of its assets in Brazilian and
global companies related to the water sector. The fund enables
investors to hold a stake in the capital stock of companies from the
sector of water exploration, infrastructure and distribution, with the
perception that these companies are in a productive chain that requires
care and on the other hand is likely to face increasing demand and a
possible price hike.
Also along the lines of adding sophistication to the supply of
investments for high value clients, BB adopted the new portfolio of
Estilo (high income) investment funds in March, becoming more
competitive, increasing revenue with bank fees and strengthening the
positioning of the Estilo brand in the market.
BB DTVM, a wholly-owned subsidiary of Banco do Brasil, is a signatory
of Principles for Responsible Investment - PRI, of the United Nations -
UN, not acquiring interest in companies that disrespect principles
relating to environmental preservation and to human and employment

Management Report – 1 Half 2011

BB's loan portfolio in the amplified concept (including private securities
and guarantees provided) ended the first half with a balance of R$
421.3 billion, growth of 20.2% in relation to the same period of 2010 and
with a market share of 19.6%.
During the half, transactions with individuals (amplified concept)
remained prominent in the BB’s total portfolio, representing 29.1%,
even after the adoption of macro-prudential measures by BACEN,
which reduced the expansion of loans to individuals in the first quarter
of 2011.
The payroll loan is still the most representative category in the
individuals loan portfolio, with 39.1% of the total. With the client base
qualification strategy and a focus on lines of lower risk, BB's payroll loan
portfolio exhibited growth of 18.4% in the last 12 months, which
reinforces the BB’s leadership in this segment, whose market share
reached 32.6%. The loans granted to civil servants are still the most
representative of BB's payroll loan portfolio, accounting for 84.4% of the
total loans. The remaining loans were granted to INSS’s (National
Institute of Retirement Insurance) retirees and pensioners (9.6%) and
employees from the private sector (6.0%).
The balance of vehicle loan operations attained R$ 30.5 billion, an
increase of 34.1% in twelve months. Of this total, R$ 15.4 billion are
transactions arising from BV.
BB's mortgage loan portfolio kept the growth trend recorded in the
previous semesters, ending 1H11 with a balance of R$ 4.2 billion, a
growth of 99.5% in relation to 1H10. In the last 12 months, 16,097
contracts were approved for individual clients and 106 contracts were
entered into with businesses.
The business loan portfolio in amplified concept ended the half with a
balance of R$ 191.2 billion. The business portfolio in amplified concept
accounted for 45.4% of the total loan portfolio of BB in 1H11, against
44.9% in the same period of 2010. Together, the working capital and
investment lines represent 73.1% of the total business portfolio.
In the delivery of services to micro and small enterprises, Banco do
Brasil continued to act as principal partner of the segment. At the end of
June/2011, BB had 2 million micro and small business clients. The
balance of transactions in favor of SMEs was of R$ 59.9 billion, a
14.7% increase as compared to June/2010. It is worth emphasizing the
allocation of R$ 42.6 billion for working capital, which represented
growth of 11.6% in relation to june of 2010. It is worth highlighting the

Management Report – 1 Half 2011

BB Giro Empresa Flex credit facility, that reached a balance of R$ 12.3
billion, representing 28.8% of the working capital portfolio.
The balance of operations with working capital lines for micro and small
businesses reached R$ 16.1 billion at the end of 1H11.
BB financed R$ 2.2 billion in 35 thousand operations with resources
from the Constitutional Fund for Financing of the Midwest - FCO and
provided services to 463 municipalities from the region. This sum
represents an increase of 27.6% in relation to 1H10. We emphasize the
fact that 86.6% of this total benefited micro/mini and small borrowers.
The construction of 48 ships and 3 shipyards was financed in the half
through the Merchant Marine Fund – FMM, amounting to R$ 3,082 million.
Accordingly the balance of financed projects corresponds to R$ 4,320
million, up 410% over 1H10.
By April /2011, Banco do Brasil had recorded a market share of 18.3%
and a total disbursement of R$ 4.3 billion in the Global Ranking of
BNDES fund transfers. Disbursements made with BNDES card up to
April/2011 reached R$ 1.1 billion representing 59.4% of market share.
In the Finame category, Banco do Brasil recorded an outlay of R$ 1.9
billion, corresponding to 43.4% of the total of BNDES’ resources
released by Banco do Brasil up to April/2011. The result of the
BNDES/Finame system of 2Q11 had not yet been released.
The business mortgage loan portfolio ended the half with a balance of
R$ 1 billion, an increase of 283% as compared to 1H10. The
performance was based largely on the strategy of partnerships with the
top developers in the country. Banco do Brasil has developed an
innovative business model that fulfills the needs of each company

Banco do Brasil continued to act as principal partner of the Brazilian
agribusiness. The agribusiness portfolio in amplified concept ended the
half with a balance of R$ 81.5 billion in agricultural loan and
agroindustrial transactions. This sum represents an increase of 14.7%
in relation to 1H10. In the total of agribusiness loan portfolio, R$ 22.3
billion refer to operations contracted with family farmers, R$ 53.3 billion
with medium and large producers, R$ 4.9 billion with agricultural
In the contracting of rural credit loans, special emphasis is placed on
the use of risk mitigation mechanisms - bad weather and prices. In June
2011, 42.7% of the agricultural costing operations were covered with

Management Report – 1 Half 2011

production insurance (agricultural insurance or proagro) and 4.3%
covered by price insurance (options contracts).

In the foreign trade, BB maintained its leadership of the export and
import exchange market, with volumes of US$ 35.7 billion and US$ 22.3
billion, respectively, and market shares of 30.3% and 23.0%,
respectively. Of the total volume of foreign exchange, 11.2% refers to
the companies from the Large Corporate, Corporate and Business
segments. BB's activities in the financial exchange market also
presented a significant increase, reaching US$ 43.7 billion in purchase
and sale transactions, which means growth of 7.9% over 1H10.
In export financing, ACC/ACE operations stand out with disbursements
of US$ 8.6 billion, which maintains BB's position as market leader with
market share of 33.1%. Of this total, 61.3% refers to the companies
from the Large Corporate, Corporate and Business segments. An all-
time monthly record was recorded in April in ACC (Advances on
Exchange Contracts)/ACE (Advances on Export Contracts), which
reached a volume of US$ 1.9 billion. Export Financing Program (Proex)
also deserves emphasis in the semester. Disbursements in the
Financing category came to US$ 293.5 million together with the BNDES
EXIM onlending operations, which totaled US$ 308.1 million. As
regards imports, the financed volume increased 41.0% in comparison
with 1H10, totaling US$ 3.0 billion.
Exchange and foreign trade online services continue to post records:
67.2% of such export exchange contracts and 45.9% of import
contracts were agreed on through the Internet. BB also offers
international business training services. In the period, 3.3 thousand
people were trained across the whole country.
 Also with respect to credit, in every financing in the project finance
category, in addition to the application of the Equator Principles, BB
adopts socio-environmental criteria in the evaluation of the study on the
limit of credit to companies with current or projected net operating
revenue above R$ 50 million and to investment projects with an amount
financed by BB that is equal to or higher than R$ 2.5 million.
The table below shows the projects analyzed in light of the Equator
Principles in the half:

Management Report – 1 Half 2011

Equator Principles¹
                                                                                                             R$ million
           Industry                    Level of risk              Amount Financed              Number of Projects

  Public                                   Low                            200                            1
  Energy                                 Medium                           215                            2

  ¹ The Equator Principles are a set of socio-environmental responsibility criteria applicable to investment projects that
  use the standards of performance in social and environmental sustainability of the International Finance Corporation
  (IFC) and of the World Bank as a reference.

Quality of the Loan Portfolio
In Banco do Brasil, the rate of 90-day-past due items reached 2.0% at
the end of June 2011, as compared to 2.7% recorded in 1H10, below
the market average for the period. The transactions rated at risk levels
AA to C accounted for 93.6% of portfolio, against the 92.2% verified in
the Brazilian Banking Industry (SFN).
Banco do Brasil intensified its supply of credit in operations with risk
mitigation measures, such as payroll loans, mortgage and by strategies
to mitigate price and weather conditions in agribusiness loans, thus
improving the quality of the loan portfolio.
Another mechanism of major importance for enabling the contracting of
investment financing operations was Fundo de Aval às Micro e
Pequenas Empresas – Fampe (Guarantee Fund for Microenterprises
and Small Companies). Composed by funds from Serviço Nacional de
Apoio às Micro e Pequenas Empresas (Brazilian Service of Support to
Micro and Small Enterprises) – Sebrae, Fampe supplements by up to
80% the value of guarantees necessary for the performance of
operations with micro and small enterprises with annual gross turnover
of up to R$ 2.4 million. At the end of June/11, the portfolio guaranteed
by Fampe was R$ 3.9 billion, with the guaranteed amount of R$ 2.9
In January 2011, Banco do Brasil adopted new measures for the
qualified expansion of business with lower risk clients. One of these
consists of identifying elements in the corporate client base with the
lowest potential risk, also using data from external sources. The
parameters for calculation of the credit limit for these clients was
adjusted to allow access to a volume of operations better suited to the
risk that it presents.
Accordingly, expenses with Allowance for Loan Losses (PCLD)
decreased in comparison with the same period of prior year, even with
growth of 17.4% of the portfolio, which would naturally increase the
balance of the allowance. Revenues with credit recovery, arising from

Management Report – 1 Half 2011

efficient management of the collection process, ended 1H11 with a
balance of R$ 1.8 billion.
In addition, BB continued with the model of identifying behavioral
profiles of clients that could default and began to offer rescheduling of
the outstanding balance preventively, before the client delays the
payment of the installments.

BB obtained a turnover of R$ 63.6 billion with cards in 1H11, growth of
28.5% in relation to 1H10. This performance enabled an advance in its
market share to 21.1%, in accordance with estimated data for the
period by Associação Brasileira de Empresas de Cartão de Crédito –
Abecs (Brazilian Association for Credit Card Companies), maintaining
BB in the leadership for the turnover in the Brazilian market of debit
cards and in Visa flagship cards.
We emphasize the billing performance in business generated in a set of
values through the BNDES Card and the Cartão Ourocard
Agronegócios, with disbursements in 1H11 of R$ 2.2 billion and of R$
3.3 billion, respectively.
The total card base, including credit and debit cards, reached 84.6
million plastic cards in June, recording a slight decline of 1.8% over
June 2010. This decrease is resulted from the work held by Banco do
Brasil to expunge of its customers base those cards which were issued
but were not activated.
                        Consolidating the cutting-edge position in the card
                        market, in 1H11 BB launched Ourocard Bonus
                        Celular, Ourocard Elo, the Ourocard customizable
                        with images to be chosen by the bearer and
                        Ourocard Visa Rio, with promotional images from
the movie Rio. With the launch of innovative products and solutions, BB
is getting increasingly closer to its clients, and was appointed the
favorite card of Brazilians according to the Cardmonitor/Instituto Medida
Certa survey and the best credit card by the CVA Solutions Survey.

Businesses with insurance, private pension fund and saving bonds
added R$ 772.6 million to BB’S income in 1H11, including ownership
equity and service revenues, which represents an increase of 29.5%
over 1H10. This result may be expressed by the insurance ratio, which

Management Report – 1 Half 2011

represents the insurance share in Banco do Brasil's recurring net
income, reaching 12.5% in 2Q11.
The consolidated net income of insurance companies was of R$ 10.2
billion in 1H11, growth of 43.2% over the same period of previous year.
These results reflect the success of the corporate restructuring, started
in 2008.
Since June, BB and Mapfre Group started to operate together, forming
the second major Brazilian group in insurance prize revenues.
Originated from this new corporate model, the BB Mapfre SH1,
responsible for life, housing and rural insurance segments, ended the
first half with R$ 1.3 billion in revenues and a profit of R$ 219.6 million.
The BB Mapfre SH2, responsible for vehicles and equity insurance
segments, recorded R$ 1.3 billion in billing and a net income of R$ 42.9
million. The result of both holdings mirrors the new corporate model
Brasilcap presented a revenue 19.1% higher than the 1H10, totaling R$
1.6 billion. Its technical provisions exceeded the amount of R$ 4.3
billion, an increase of 14.5% and consolidating its leadership position in
the market.
Brasilprev presented R$ 43.0 billion in managed portfolio, a growth of
59.8% in the last six months, ending the 1H11 with 25.4% of market
share in the collection item (position of May/2011).
Aligned to consulting for private customers, in the field of equity
preservation and protection, actions were carried out to offer residential
and auto insurance. Supplementing the insurance consulting services,
BB offered life insurance, all with exclusive benefits and differentials for
this segment. Improvements were implemented at the central offices of
the insurance companies for specialized response to the demands of
this segment.
With regard to closed-end private pension plans, BB Previdência ended
the half with R$ 1.3 billion in assets, 37 corporate plans by 47
sponsoring companies, 4 plans created by 4 trade and professional
entities, and over 55 thousand participants.

Banco do Brasil operates in the domestic capital market through BB
Banco de Investimento S.A. (BB-BI). In the 1H11 30 issues of fixed-
income securities were made, adding up to R$ 9.9 billion , placing BB in
the first place in Consolidated Anbima ranking, with 25.9% of market

Management Report – 1 Half 2011

share. In the securitization segment, BB made 2 issuances of Credit
Rights Investment Fund – FIDC, 3 of Real Estate Receivables
Certificates – CRI and 1 of Real Estate Funds, adding up to R$ 918.6
In the stock market, BB-BI coordinated 2 share offerings that amounted
to R$ 1.5 billion. In terms of distribution, in the last 12 months BB
reached the first position in Anbima ranking of Variable Income,
representing 61.9% of market share.
In the custody of assets in the domestic market, BB occupies 3rd place
in the Anbima ranking, may/2011 position, with R$ 498 billion under
custody, representing 22.6% of market share, and operates as a real
estate asset depository institution. It is worth remembering that the
Anbima ranking does not include the custody of the assets of the actual
custodian institution and its conglomerate. Including the assets
belonging to the Treasury of BB and of the Extra market Funds, total
assets under custody amounted more R$ 320 billion.
In the international capital market, Banco do Brasil, through its overseas
brokers BB Securities Ltd (London) and Banco do Brasil Securities LLC
(New York), took part in 9 of the 48 foreign funding operations carried
out by companies, banks and the Brazilian government, of which 8 had
lead manager condition and 1 co-manager status. Of the total sum of
approximately US$ 26.6 billion issued in the semester, BB participated
in around US$ 6.4 billion. Additionally, Banco do Brasil took part in 3
operations of foreign issuers, being 1 as lead-manager and 2 as co-
manager which summed US$ 2.65 billion and EUR 750 million.
In the mergers and acquisitions market , BB-BI took part in 1
consummated operation, which amounted to R$ 86 million, coming in
12th place in the Anbima ranking accumulated up to march 31th, last
available data.
BB offers a share purchase and sale service by means of the network
of branches, Internet (home broker) and mobile phone, that recorded a
volume of R$ 1.4 billion generated in 1H11.
In the private equity and venture capital industry, BB-BI has been
operating since 2004 as an investor and, as of 2007, has been
providing economic and financial advisory services to private-equity
investment funds. Currently, BB is quotaholder in 13 funds and advisor
in 4 funds, totaling a committed capital of R$ 1,262.5 million.
The focus on the offering of Agribusiness Letters of Credit – LCA
among Private customers allowed the increase in the market share in

Management Report – 1 Half 2011

this market segment. There was an increase of 568% in funding when
compared to the fourth quarter of 2010.
Still regarding Private customers, BB made the first issuance of Real
Estate Receivables Certificates – CRI with attractive rates in relation to
the market, which allowed the loyalty of these customers and increase
in businesses.

BB Administradora de Consórcios ended the 1H11 with 284.3 thousand
active quotas, growth of 75.7% in 12 months. The vehicles segment,
which grew 101.3%, reaching 247.3 thousand quotas in June 2011,
merits special emphasis.
In the first half of 2011, there were 94.4 thousand new consortium
quotas sold, representing R$ 2,906 million in letters of credit.
In tax collection, BB accounts for 23.9% of the market at federal level.
In the first half of the year were collected, among federal and state
taxes, R$ 178.4 billion and R$ 8.8 billion in the municipal level.
By means of the bank collection, tax deposit form collection and
standing order services, Banco do Brasil provides services to over 569
thousand companies, which brought in R$ 382.8 billion in 1H11, with a
total of 489.5 million of bills. These services added R$ 1 billion in
revenue, growth of 10.8% in relation to 1H10.
Authorized Direct Debit (DDA) had 1.2 million electronic drawees and
20% market share, and over 96.6 million bank payment forms were
electronically processed. That service avoids payment form printing, a
measure that contributes to reduce paper use, and thus benefits the
Banco do Brasil processed credits originating from payroll agreements,
totaling R$ 85.4 million, involving corporate clients and the public sector
in the semester. All told, BB catered to 11.4 million public officials and
private company employees with this service, having brought in R$
147.4 billion.
There were detailed and complex studies of the social security situation
of civil servants from two major municipalities, resulting in the
presentation of Social Security Diagnoses of the Pension Regimes for
Government Workers – RPPS. The Diagnosis also offers guidelines
and referrals for refinement, adaptation and the legal framework of
RPPS. Other services were provided to the segment, such as: financial,
accounting and actuarial advice, analysis for concession of benefit,

Management Report – 1 Half 2011

technical support and training for managers and board members of the

Banco do Brasil has an extensive portfolio of financial products and
services with socio-environmental appeal, which ranges from premium
bonds, which set aside part of the management fee for socio-
environmental projects, to credit lines that support the modernization of
industrial parks by means of the financing of eco-efficient machinery
and equipment.
BB launched the Cheque Especial PF 10 dias sem juros (Overdraft
Account for Individual Clients 10 days without interest) in April 2011.
The new product is exempt from the collection of interest from clients
and employees that have used the overdraft limit for a period not
exceeding 10 days, consecutive or alternate, considering the duration of
the portion of charges. For this purpose, the client or employee should
adhere to one of the Environment Bonus Service Packages. Besides
the benefit of interest rate exemption, part of the revenue earned (up to
5%) with the tariffs of the Environmental Bonus Service Packages will
be set aside for Programa Água Brasil (Water Brazil Program). In just
over 2 months after its launch, the product obtained the adhesion of 215
thousand clients.
Two new investment funds targeting the segment of youths were
launched in March 2011: BB Multimercado Balanceado LP Jovem and
BB Ações Índice de Sustentabilidade Empresarial Jovem. These
products are designed to engage youths in socioenvironmental issues
both by the attribute of financial education, creating an investment
culture, and by their environmental appeal in setting aside the monthly
sum of 20% of the management fee for Programa Água Brasil.
For the beginning of next half, Banco do Brasil is preparing to operate
directly in Oriented Productive Micro-credit – MPO, offering micro-credit
lines geared toward the formal or informal entrepreneur with annual
turnover of up to R$120 thousand.
MPO is the credit extended to meet the financial needs of small
businesses, using methodology based on the direct relationship with
entrepreneurs, at the place where the economic activity is executed. At
least 2,500 employees will be trained to visit small businesses, carry out
socioeconomic surveys, provide educational guidance on business
planning, for the definition of credit and management needs focused on

Management Report – 1 Half 2011

the development of the venture. MPO will initially be available in cities
with more than 150 thousand inhabitants.

Fundação Banco do Brasil – FBB social investments, reached R$ 57.5
million in programs, actions and social technologies in the jobs
generation, income and education area. The amount invested was
geared principally toward communities of family farmers, agricultural
extractivists, settlers, quilombolas (slave descendants), indigenous
peoples and waste pickers that collect recyclable materials across the
country, especially in regions with low human development rates and
communities with a greater risk of social exclusion.
The actions of BB and FBB currently in progress that merit special
emphasis are:
   Programa Aprendiz Banco do Brasil e Estágio de Estudantes
     (Student Internship and Apprentice Program) – 4,778 low
     income teenagers trained in 1H11 and 9,496 interns developing
     curricular activities on BB premises;
   Digital Inclusion Program – over 1.5 thousand points of digital
     inclusion installed, including the telecenters from Banco do
     Brasil's Digital Inclusion Programa, recently migrated to FBB, and
     the Digital Stations, all implemented in previous years. On
     4.26.2011, the Board of Officers approved the migration of the
     Digital Inclusion Program of BB - PIDBB to Fundação Banco do
     Brasil, as well as the creation of the Program for Social Inclusion
     and Transformation by means of the Donation of Replaced
     Computers. In this new model, the allocation of replaced
     computers is expanded, fulfilling the requirements of the Digital
     Inclusion Program, now under the management of FBB, and of
     other regional and national commitments. Thus, Banco do Brasil
     aims to confer social benefit to the disposal of the equipment, with
     greater integration of actions and solutions, visibility and leverage
     to the program.
   Centros Culturais Banco do Brasil (Banco do Brasil Cultural
     Centers) – 45,854 public school students took part in guided
     visits in 1H11 for the promotion and disclosure of culture by
     means of a wide variety of artistic manifestations;
   Sport Sponsorship – social projects and participative
     promotional actions; collection of foodstuffs in sports' events; and
     volleyball and tennis schools for the local community from the
     venues of the events;

Management Report – 1 Half 2011

     Social Technology Bank – 239 technologies certified in the first
      half of 2011;
   AABB-Community Program – broadcasting sport and culture to
      approximately 51,722 children and adolescents catered to
   Programa Trabalho e Cidadania (Work and Citizenship
      Program) – 5,897 workers obtaining benefits in projects to
      support the production chains of cassava cultivation, cashew
      cultivation and solid waste; 2,055 workers involved in projects to
      support sustainable regional development in the basin of Rio São
      Bartolomeu and in the region of Vale do Rio Doce;
   Programa Reaplicação de Tecnologias Sociais (Program for
      Reapplication of Social Technologies) – 1,224 families of
      extractivists, farmers and rural micro entrepreneurs obtaining
      benefits from the deployment of social technologies "Integrated
      and Sustainable Agroecological Production (Country) and
For further information visit

                          CORPORATE MANAGEMENT

Banco do Brasil's corporate governance structure is comprised by: the
Board of Directors, advised by the Audit Committee and Internal Audit,
and the Executive Board, made up of the Board of Officers (president
and 9 vice-presidents) and by 26 statutory directors. BB also has a
permanent Board of Auditors.
Decisions are taken collectively at all levels of BB. With the purpose of
involving the executives in the definition of strategies and approval of
proposals for BB's different businesses, the Management uses
committees, subcommittees and commissions at a strategic level, which
ensure the agility and security for the decision making. Among the
instruments used to assure good governance, it is also worth
highlighting the Corporate Governance Code and the Code of Ethics.
As a good corporate governance practice, BB has introduced tools to
evaluate the performance of the Board of Directors, Audit Committee
and Executive Board, in order to support the preparation of internal
diagnoses and the identification of measures to improve performance.
Banco do Brasil is signatory of the Anbima Code of Regulation and Best
Practices for the Private Banking Activity in the Domestic Market,

Management Report – 1 Half 2011

ensuring high ethical standards, maximum transparency, qualification of
professionals and commitment in the quality of the recommendation of
products and services.
Moreover, Banco do Brasil, its Shareholders, the Officers, and the
members of the Audit Committee undertake to resolve all and any
dispute or controversy related with the New Market Listing Regulation
by means of the Arbitration Chamber of the Bovespa Market, in
conformity with a commitment clause contained in the By-laws of Banco
do Brasil.

In business administration, BB has concerned itself with disclosing its
activities to the market in as much detail as possible, on a timely basis
and without losing quality in the information provided. In addition to the
wide range of reports and information made available at the Brazilian
Securities Commission (CVM) and on the Investor Relations website,
Association of Capital Market Investment Analysts and Professionals
(APIMEC) meetings and other events with shareholders, Banco do
Brasil has been inviting the market to attend conferences whenever
management finds it necessary to clarify specific topics concerning the
With this goal, in the 1st half of 2011 BB took part in 57 meetings with
domestic investors and analysts, 12 conferences, and promoted 4
conference calls with analysts and investors, besides over 250
responses to telephone inquiries.
BB provides up-to-date information to the market at the Investor
Relations site (

The complaints received by the BB Ombudsman Service have different
motivations, freely portraying past experiences of consumers. After a
neutral and impartial analysis, complaints become inputs for potential
improvements of processes, products, services and channels of Banco
do Brasil.
In the 1H11, the BB Ombudsman Service presented 28 proposals for
improvements of various products and services to the Board of
Directors, after negotiations of actions and deadlines with the managers
in charge.

Management Report – 1 Half 2011

The BB Ombudsman Service also seeks integration with the main
consumer protection entities and regulatory agencies, for dialogue and
refinement of positioning, implementation of shared actions and
strengthening of the ombudsman culture besides respect for
Over and above complying with legal determinations, the BB
Ombudsman Service represents the commitment of Banco do Brasil to
good market practices, in respect of consumer rights and the constant
pursuit of refinement and improvement of its relationship with the
various audiences served.

Risk Management
At Banco do Brasil, risk management is carried out on a joint and
segregated basis in relation to its business units. Risk and credit
policies are specified by the BB’s Board of Directors. These policies are
expressed by global risk exposure limits, which are defined by the
Global Risk Committee (CRG), which is a forum composed of its
president and vice-presidents. The measures for implementing and
monitoring the guidelines issued by the CRG are carried out by the
Credit Risk, Marked and Liquidity and Operating Subcommittees.
In the sphere of market risks, Banco do Brasil has improved
management with a review of the policy for classifying Trading and
Non-Trading Portfolio transactions, defined in Bacen Circular
3354/2007, a review of the parameters for measuring the quantitative
requirements of risks of the Internal Market Risk Model, a review of the
Market Risk Stress Testing Program and a review of the Corporate
Manuals of Mark-to-Market and Modeling of Products without Defined
Maturity Date, a defined maturity date, all in line with the stipulations of
Bacen Circular 3478/2009, which deals with internal market risk
models. With regard to liquidity risk, there was a review of the Liquidity
Contingency Plan of the Financial Group and of the assumptions for the
Liquidity Stress Scenario.
For credit risk management, BB uses proprietary methodologies for the
risk rating of clients, which are in line with best market practices and
with the concepts introduced by the Basel Accord, considering the
cadastral aspects (credit score), the credit history (behavior score) with
BB and the market, as well as the use of banking products. BB has also
made important investments in information technology (IT) solutions to
support its credit risk management process, whereas the new tools are
already in the process of installation.

Management Report – 1 Half 2011

Alongside credit concession standards, Banco do Brasil maintains
strategies for collection and recovery of receivables based on statistical
models that help discover, from the identified profile of each client, the
most suitable channels and the most efficacious relationship model for
resolution of the credit delinquency.
In order to manage operational risk, Banco do Brasil, following the best
market practices, monitors operational loss through a systemized
internal database, exposure limits and key risk indicators, besides risk
matrix to assess relevant outsourced services.
Aiming at the ongoing improvement of the operating risk management,
in the first half of 2011 BB reviewed specific limits to operating losses
related to "Labor Issues", "Faults in Businesses", "Faults in Processes",
"External Fraud and Theft", and "Internal Frauds" with the purpose of
providing more expeditious proposals for mitigating measures.
Banco do Brasil also approved an eligibility plan aimed at the adoption
of the advanced approach and at the improvement of operational risk
management, thus seeking better allocation of its capital in line with its
business requirements.
With the objective of preventing, correcting or inhibiting weak points that
may generate risks for BB, and of reducing losses and strengthening
the culture of risks, BB uses the Technical Risk Recommendation
(RTR), issued to the process or product management areas when the
need for adoption of loss mitigation actions is identified, besides
guaranteeing the fulfillment of the responsibilities defined in the risk
management phases. In addition to the RTRs, BB also uses Technical
Control Recommendations -RTC, Technical Security Recommendations
-RTS, and the recommendations of internal and external audits.
Under Pillar I of Basel II, BB is in the process of preparing to become
eligible to the use of advanced approaches to measure capital
requirements for the coverage of market, credit and operational risk,
having continuous monitoring included in BB’s risk and IT governance,
with periodic reporting to members of senior management
In relation to Pillar II, in order to ensure there is sufficient capital to bear
up under the strategies and their underlying risks and to comply with the
rules related to prudential banking regulations, during the first half of
2011, Banco do Brasil developed a specific capital management policy,
reviewed capital monitoring indicators and upgraded the capital
planning process.
For purposes of compliance with Pillar III, Banco do Brasil published the
required information about risk management, Required Referential

Management Report – 1 Half 2011

Equity and Referential Equity, as provided for in Bacen Circular
The risk management policies of Banco do Brasil are available at the

Internal Controls
With the purpose of strengthening the processes related to the
generation and disclosure of information to the market, mechanisms
were implemented throughout the half to ensure control efficiency, in
conformity with CVM Instruction No. 480/09.
For the launch of new products on the market, BB has a system and
tools for keeping track of the prospecting, development, implementation
and monitoring phases, which have undergone improvements in the 1st
half of 2011, aiming at making this process more secure.
A new method for management to work with abroad branches was
implemented during the half, with the use of new instruments for
assessing the controls existing at these units.
Banco do Brasil monitors and evaluates the most relevant processes
used in all distribution network units, including its support units, such as
credit, master file, opening of current accounts and preventing and
fighting money laundering.
In the six-month period, 230,253 processes were verified to evaluate
compliance with policies.
The purpose of this verification is to evaluate compliance with policies,
standards and internal procedures in these processes, with results
being reported to the respective managers so that they correct identified
non-compliances and continuously improve processes.
Banco do Brasil evaluates the effectiveness of internal controls related
to consolidated financial statements for each year. Regarding the
consolidated financial statements for the first half, we concluded, with
reasonable level of assurance, that Banco do Brasil's internal controls
are adequate to its size, business complexity and risks it is exposed to.

Prevention and Avoidance of Money Laundering and Financing of
For Banco do Brasil, preventing and fighting against money laundering
and financing of terrorism is a legal obligation and a commitment to the
Country. In its internet website, BB discloses the policies adopted to

Management Report – 1 Half 2011

prevent and avoid money laundering and financing of terrorism, and
provides suggestions to customers on how to avoid being used by
criminals in schemes of this nature.
In addition, BB invests to improve the mechanisms that prevent and
combat money laundering and terrorism financing, and to train its
employees. On-site training and internal certification in BB Prevention
and Avoidance of Money Laundering and Financing of Terrorism are
certified with Seal by Enccla - National Strategy for the Avoidance of
Corruption and Money Laundering. The Enccla seal is granted by the
Ministry of Justice to courses which should meet the requisites as
defined in the National Program of Education and Training for the
Avoidance of Money Laundering. - PNLD.
Additionally, from 2009 on, BB has addressed this issue in its external
hiring selections.

Environment Security
In order to prevent the growth of organized crime, which also obtains
capital by attacking bank facilities, Banco do Brasil permanently
updates its units’ security devices around the country.
These environments' security management includes the evolution of
technologies to respond to attacks and also the functions of
environment monitoring and control.
Investments in security together with constant training of professionals
contribute to the protection of customers, employees and society in
general, as it reduces the financial return of criminal actions.

Crisis Management and Business Continuity
To guarantee the perpetuity of the Organization is one of the
commitments of Banco do Brasil with the society and the country.
Banco do Brasil monitors, via media and the capillarity of its network in
Brazil and the world, situations that may pose a risk to people and
Managers at several organizational levels are advised to prepare
themselves to respond to situations that represent a threat to life,
environment, business and the company's image, through an
interdisciplinary process denominated crisis management and business

Management Report – 1 Half 2011

Banco do Brasil sees Information Technology as a strategic factor in
operating effectiveness and a key instrument for competitive
distinctiveness; for this reason, it continuously invests in improving and
modernizing its IT facilities, not only from the technical point of view but
also from the governance and management points of view.
The major BB IT actions include new technological integration models
that will permit obtaining maximum benefit from different platforms
used, the online monitoring of business events that will allow real time
management, a new approach to investment, with segregation into tiers
and architecture guided to service, that will allow a high level of
components reutilization and greater agility in developing new solutions.
In line with the "Retail Transformation Program", Banco do Brasil acts to
modernize its technological architecture, with emphasis on the new
business platform interface to be used by retail agencies, optimizing
service time spent with our customers.
The development of IT solutions to support sales and the relationship
with customers by providing information for the active monitoring of
business, controllership and product and services management are the
key elements for transforming the Retail area.
In order to comply with regulatory requirements, BB strongly invests in
the preparation of a solid corporate technological environment, similar
to the ongoing solutions to support Basel II processes in market, credit
and operating segments.
New technological solutions are also being developed for our branches
abroad and for corporate management.
A new and modern Data Processing Center (Datacenter) is being built
in Brasília, Distrito Federal, to modernize our technological
infrastructure, supporting business continuity with security and high
availability. Its conclusion is expected for 2012.
In addition, a new processing architecture with site segregation and
specialization, which adjusts infrastructure to the characteristics of each
business, offers the means for greater assertiveness and investment
In order to improve these processes governance, BB started the
implementation of a new IT Governance model that is adequate to the
current and future needs of the Conglomerate.

Management Report – 1 Half 2011

The main focus of this new model is to improve management processes
of the BB IT area, in order to guarantee its alignment with the Corporate
The new IT Governance model is prepared based on best practices and
standards to increase IT area effectiveness and also its process control,
ensuring technological sustainability and the perpetuity of Banco do
Brasil. It will be implemented during 2011 and the first half of 2012.

Since the beginning of 2011, to further improve service processes,
Banco do Brasil follows up all ATMs operation in the ATMs Environment
Monitoring Centers, on a centralized basis, to ensure customers'
satisfaction with this channel.
It also started to monitor, using image devices, ATM rooms in large
cities. The project intends to provide, in addition to maintaining cleaner
rooms and providing more equipment, a friendly environment that will
allow customers to make good business.
One of the actions of the "Retail Transformation Program" includes the
new setting of the branches. In the first half of 2011, BB adapted 102
premises to the new visual standard. It is a project designed to
modernize the physical facilities of the branches, to offer greater
comfort to clients, to install customer service environments with greater
privacy and modern security devices. In 2011 it is expected that the
new layout design will be expanded to as many as 565 branches.

Banco do Brasil emphasizes the Eco-efficiency Program, that aims to
produce more with less, using fewer natural resources and less energy
in the productive process, reducing waste and production and operation
In May 2011, BB extended its selective collection program to all
municipalities of Paraná State, where it operates, by forwarding waste
to cooperatives and/or collectors associations.
It is worth mentioning that BB is a founding member of the Companies
for Climate Program and of the Brazilian GHG Protocol Program, both
targeting reflection on and proposition of actions to combat climatic
In its 2011 emission inventory, based on 2010 information, BB included
three new emission sources. In addition to including new sources, its

Management Report – 1 Half 2011

inventory was verified by an independent party and received a golden
seal, the greatest recognition level, from the GHG Brazilian Protocol
Banco do Brasil has also put in place a number of steps to reduce the
use of paper. Corporate systems were adjusted to preferably make
double-face prints and campaigns were conducted to raise the
awareness of employees.
BB carries out initiatives geared toward the rationalization of input
consumption and responsible disposal of waste. One of the divisions of
the program provides for the reduction of 25% in water consumption in
the main buildings of BB.
Banco do Brasil has invested in new channels for processing
transactions and for doing business with its customers. There is
growing trend to employ channels that do not involve printing and,
therefore, do not consume paper. Among such channels, we may point
out the Internet, Customer Assistance, and Mobile Banking.
It is worth emphasizing the consolidation of the DDA - Authorized Direct
Debit initiative, an option that allows the client to register as an
electronic drawee, sparing with the need for issuance of paper bank
payment slips. BB is a leader in the DDA service, and reached this
position because it started providing this service for customers even
before it was launched by the Brazilian Bank Federation (Febraban).
This initiative, conducted only in the first half of 2011, permitted savings
of 10,288,698 liters of water and 514,435 Kw (electricity), in addition to
conserving 5,659 eucalyptus trees and avoiding the emission of 1,646
tons of CO2.


BB ended the 1st half of 2011 with 112,913 employees, as compared to
106,241 in the same period of 2010. Out of this staff, 5,852 new
employees are approved in public contests, thus reinforcing BB’s
commitment in improving working conditions and organizational climate
to its employees, customer service and the country's development by
means of generation of jobs and income.
Banco do Brasil offers to its employees the possibility of managing their
professional trajectory and plan their careers. It has a Professional Rise
Program and a Talent and Opportunity Bank (TAO) through which it

Management Report – 1 Half 2011

identifies the most skilled employees to perform different functions in
the company. In the first half of 2011, 16,608 employees were identified
in TAO system and appointed to commissioned jobs.

It is worth to emphasize that since 2002, Banco do Brasil maintains the
Corporate University of Banco do Brasil (UniBB) to help its employees
to discover and develop their talents, improve professionally and
contribute to the good development of business. UniBB key role is to
develop human and professional excellence by creating value in
educational solutions, contributing to the improvement of organization
performance and strengthening of Banco do Brasil institutional image.
UniBB is a strategic resource to position Banco do Brasil in the financial
industry and to strengthen its institutional image. Its actions are in line
with the Corporate Strategy and contribute to put in place the BB's
vision of future, achieve its strategic objectives and develop its beliefs
and values, consolidating its commitment with shareholders, customers,
employees and the society.
In the UniBB Portal, personal and professional development actions are
disclosed and distance online training is available. This portal may be
accessed both through Corporate Intranet and Internet in the address: It has an area that is open to the public and
another area accessed only by our personnel.
Banco do Brasil Corporate University (UniBB) promoted, in the first half
of 2011, 340,017 class trainings, self-trainings and on-site trainings,
totaling 4,106 thousand hours. Average training hours per employee
was 36.6 hours in the first half of 2011. Training opportunities were
offered through 228 courses, of which 121 were self-instructional, 10
were on-site, 70 were class trainings and 27 were contracted in the
market. In addition, external courses were contracted for punctual
needs. These training actions use different teaching and supporting
methods, such as: corporate TV, the web, press, booklets, etc.
In addition to skill trainings, BB offers improvement opportunities
focused on continued education, such as scholarships for graduation,
post-graduation (specialization, master degree and PhD) and foreign
language courses. In the 1H11 BB had 8,636 scholarship employees,
as graduation and post-graduation students, and 318 in foreign
languages. General education at the end of the first half of 2011 was as
follows: 23.0% of BB employees had completed specialization, master
or PhD courses, 48.9% had completed degree courses, 27.6% had
completed high school and 0.5% had completed the basic education.

Management Report – 1 Half 2011

UniBB also encourages the development of educational spaces in all
BB’s units and expands BB learning community by incorporating
customers, suppliers, partners, members of subsidiaries, associates
and associations related to BB. It offers professional education to this
public through partnerships with renowned education providers and
ensures that professional development internal needs are met.

To support teaching and learning, Banco do Brasil has corporate
information units (libraries) that coordinate prospection, management,
and dissemination of information and knowledge activities.
The community has access to the libraries' premises to study, research
and also to consult our book collection. Providing services to the
community is part of the BB’s social responsibility actions.
Information units' total collection comprises over 250 thousand books
with emphasis on BB’s business areas. It also has books from other
areas to contribute to the integral formation of the human being. In the
first half of 2011, 136,814 book were lent to users. Facilities were
visited by 3,512 people and the book collection increased due to 8,216
new acquisitions and 3,187 donations.

In addition, BB allows its employees to take part in the Program for
Internal Certification of Knowledge, as a training and professional
qualification strategy. At the end of 1H11, 163.7 thousand certifications
have been given out.
BB encourages employees to obtain legal investment certificates (CPA
10 and 20) and money laundering prevention and combat certificates
(PLD). At the end of the first half of 2011, 64,230 thousand employees
had CPA 10 and 20 certificates and 15,250 had PLD certificates. BB is
the financial institution with the greatest number of employees holding
legal certificates.

Performance of BB employees is formally monitored and evaluated
through a tool denominated "Performance Management through
Competences" (GDP). It gathers, in a single model, items of the
Balanced Scorecard (BSC), Management through Competence,

Management Report – 1 Half 2011

Management through Results and 360 Degree Evaluation. Employees'
performance is evaluated from five different perspectives: financial,
customers, internal processes, organizational behavior and society.
Evaluation is carried out by bosses, subordinated employees, peers
(colleagues) and employees themselves (self-evaluation). In the first
half of 2011, 108,241 employees had their performance followed up
through this tool.
In addition, the Board of Directors, Audit Committee and Executive
Board's performances are annually evaluated; this initiative is a good
corporate governance practice allowing internal diagnosis and
identification of opportunities for improvement actions.

The table below shows the remuneration and the benefits granted to the
                                                                                                     R$ million
                                                                            1H11             1H10      (%)

 Payroll¹                                                                   6,316            5,627     12.2
 Supplementary Pension²                                                     139.7            100.6     38.9
 Health Care Plans²                                                         429.6            375.4     14.4
 Profit-Sharing Plan³                                                       927.8            767.2     20.9
 Training4                                                                    26              32      (19.0)
  ¹ Expenses with salaries, benefits, social charges and personnel provisions.
  ² Funding of supplementary pension and health care plans, pursuant to Notes 22.c and 27.
  ³ Amount set aside for Profit and Gain Sharing, as Statement of income for the year.
    In accordance to Note 22.c

Banco do Brasil’s structure includes the Quality of Life at Work area,
which develops and manages several programs aimed at improvement
in the quality of life of employees, such as PCMSO (Program for
Medical Control of Occupational Health), Sesmt (Specialized Services
in Safety Engineering and in Occupational Medicine of BB), Tabas
(Program for the Control of Smoking), Pavas (Program for Assistance to
Holdup and Kidnapping Victims), Program for Recognition of
Employees and the Quality of Life at Work Program.
In order to encourage dialogue, value ethical and human relations and
contribute to the improvement of policies, processes and practices of
the Personnel Management and Social Environment Responsibility
areas, Banco do Brasil has since 2005 an institutional channel
denominated "Ouvidoria Interna" (Internal Ombudsman) available to all
its employees.

Management Report – 1 Half 2011

The action of the Ombudsman aims at encouraging dialogue in the
work environment and strengthen participative, democratic and
transparent management by mediating conflicts and caring for
principles and ethical conduct.
The Ombudsman develops instruments to permit getting close to
employees, instruments for participation in seminars, work meetings,
visits to BB’s Units, lectures, audio and video conferences in order to
publicize its action (work methodology) and strengthen the employee-
Board relationship.
On a half-annual basis, the Ombudsman forwards to BB’s Board of
Officers, Executive Summaries on the problems indicated by employees
in the Personnel Management and Social Environmental areas.
Banco do Brasil maintains a transparent and respectful dialogue
process with the representatives of its employees. It maintains a
Collective Labor Agreement of national sphere, holds permanent
negotiations with the trade unions and organizes theme groups with the
bankers' representatives to discuss in detail topics of interest to the
workers and to the company.
Moreover, BB launched both a "collective labor agreement" website on
the intranet and a specific blog on the topic, aiming at the refinement of
the internal communication process in favor of the consolidation and
dissemination of the culture of dialogue with the trade union entities,
building up interaction and serious debate on the topics involved in the
process between the company and its employees.

                            LEGAL INFORMATION

In compliance with CVM Instruction No. 381, Banco do Brasil reports
that KPMG Auditores Independentes has not provided, to BB and
subsidiaries, any services that could affect its independence in relation
to audit work in the first semester of 2011.
In the engagement of services not related to external audits, Banco do
Brasil adopts procedures based on the applicable legislation and on
internationally accepted principles that preserve the independence of
the auditor. These principles consist of: (i) the auditor should not audit
his own work and (ii) the auditor should not act managerially before his
client nor promote the interests of his client.
In Banco do Brasil, the contracting of services related to external audit
should be preceded by the opinion of the Audit Committee.

Management Report – 1 Half 2011

In compliance with article 8 of Bacen Circular 3.068/2001, Banco do
Brasil confirms that it has the intention and financial capacity to hold
until maturity the securities classified in the "Securities Held to Maturity"
category. The financial capacity is backed by a cash flow forecast that
does not take into consideration the possibility of selling these
According to the provisions of CVM Resolution 488/05, BB explains that
there was an increase of 3.7% in investments in relation to the 1st half of
2010, emphasizing the sum of investment in real estate (renovations
and constructions), in the amount of R$ 272 million, in information
technology (R$ 213 million) and in equipment (R$ 49 million).
In compliance with Article 243 of Law 6404/76, BB reports that
investments in subsidiary and associated companies totaled R$ 19.7
billion as of June 30, 2011.
In accordance with criteria defined by the Brazilian Statute of Micro and
Small Businesses (General Law of Micro and Small Businesses), 97.7%
of BB's business clients are classified as micro and small businesses.
The balance of funds used by SMEs reached R$ 35.4 billion in 1H11,
representing a 4.4% increase as compared to the same period of 2010.
The balance of working capital operations contracted by very small
companies totaled R$ 4.2 billion, and of small companies totaled R$
20.3 billion. Investment operations aimed at very small companies
reached R$ 2.4 billion; for small companies, investments reached R$
8.1 billion.


    Licitações-e, Banco do Brasil's public bidding portal, was the big
     winner of the V Prêmio 19 de Março (March 19 Award), granted
     during the VI Brazilian Congress of Auctioneers occurred in March
     in the city of Foz do Iguaçu (PR). Of the five awards granted to the
     category 'Electronic Trading Systems, Licitações-e won three:
     'Greatest number of trading sessions conducted and completed in
     2010'; '2010 Best Electronic Trading System'; and 'Best Interaction
     with the Supplier'.
    Ourocard, the Favorite Card of Brazilians according to the research
     conducted by Cardmonitor / Instituto Medida Certa from December
     2010 to January 2011, was also elected as the best credit card

Management Report – 1 Half 2011

     (Brand Force), according to the research CVA Solutions carried out
     in February and March 2011.
    Banco do Brasil was the winner of the X Prêmio e-Finance, (e-
     Finance Award), granted by Editora Executivos Financeiros, in the
     category GED-Gerenciador Eletrônico de Documentos (Electronic
     Document Manager), with the following cases: "Electronic Folder -
     Stage II" and "Servicing Center Europe - Electronic Management of
     Documents for the Europe Block".
    Also in the X Prêmio e-Finance, Banco do Brasil won in the
     category Market Innovation, with the following cases: Brasília
     Concept Sore and New York Convenience Room.


We thank the dedication and diligence of our employees and
collaborators, as well as the trust of shareholders, clients and company.
Further information: Investor Relations Website (


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